If you diligently save money every month you’re on the right track and ahead of the pack. But did you know that committing to saving some extra cash is only half the battle? The next step is to get your money to work for you. You can do more with your savings than simply letting it burn a hole in your pocket.
Why saving without a plan is a bad idea.
Whether you’re stashing piles of cash or watching your savings pile up in your bank account after inflation and bank charges the value of your money is essentially lower if you’re not gaining interest on it. The most profitable type of deposit for a bank is known as an idle deposit, which is money just sitting in an account earning very little to no interest. That money is used to fund short term loans where banks make a killing off the difference between the interest they charge and the interest you earn.
Making your monthly savings work for you.
Now that you’ve developed a savings mindset, find a better place to put your money so that you get the most out of it. Here are some great ways to have your savings work even harder.
- Open an account with a good interest rate.
If you move your money into a money market or seven day fixed account you’ll earn better interest than if your money sits idly in your everyday account or collects dust stashed away in your cupboard. - Open a tax-free savings account.
While the interest gained on a tax-free savings account might not be light years ahead of the interest earned on your everyday account, the opportunity to save tax-free makes it well worth placing your money there. - Invest your savings.
Now is the time to cross over from saving to investing. Put your money into a market that will help it grow. Investing can be complicated so it’s best to find a reputable financial institution that will understand your investment needs and build a portfolio to suit you. - Save into your bond.
Saving into your bond is a great way to save and decrease your bond repayment term in one go. Make sure you have a flexi facility which allows access to your savings at will. - Save into your credit card.
Your credit card doesn’t have to be your enemy. If you use it wisely and save into it instead of your regular account you will earn better interest.
With a little effort and ingenuity, there are many ways you can make your money work harder and cost you less. Similarly, if you’re just ‘idly’ keeping your car insurance with the same company you’ve been with for years, you may be missing a trick. Click here to get a quote from OUTsurance … if we can save on your monthly car insurance premiums, ask us for R400. Either way, you win and have the peace of mind of knowing you’ve been proactive and are getting the best possible deal.